Are Business-related Expenses Deductible From Income When Calculating Alimony or Child Support?
While child support is calculated according to a formula and alimony is supposed to be calculated by weighing fourteen (14) different factors, there are some similarities in the way the court calculates each. The Michigan legislature has determined that while the government has allowed considerable deductions for business-related expenses due to a variety of historical and policy reasons, those same reasons are "not always relevant to monies a parent should have available" for support.
These precarious deductions include, but are not limited to the following: rent paid by a business to the individual or to another business owned by that individual, real estate depreciation should always be added back, depreciation on anything depending on how it is calculated, home office expenses, certain insurance, entertainment, travel, mileage and other vehicle related expenses. This means that for purposes of calculating alimony or child support, a person's income might be much higher than would be expected based upon reported income and this can lead to a substantial difference in the amount of the monthly support payment.
Unfortunately, the Friend of the Court (FOC) typically calculates support as reported by the individual to the FOC. Literally, a person can mail back the FOC income questionnaire without any verification, and the FOC in most counties will issue a recommendation based upon that. Without an attorney to represent the recipient spouse, there is a good chance that he or she will not receive the appropriate amount of support. On the flip side, It should be noted that while the law provides that in most cases these expenses should be added back into income, the exact words include the phrase "not always relevant", which means that there may be a good argument to provide at least some leverage to deduct those expenses from the payer spouse or parent. In any event, it truly pays in the long-run to be represented by competent counsel that practices only in the area of divorce law. If you have questions regarding divorce, separation, alimony or child support, please schedule a consultation by contacting my assistant Cathy at (248) 608-4123 or [email protected].